As fares and fees rise, passengers want service

[September 20, 2008]  FORT WORTH, Texas (AP) -- On a recent rainy day at Dallas-Fort Worth International Airport, a suitcase bound for Colorado Springs, Colo., lay on the ground outside a terminal under a maze of American Airlines conveyor belts that ferry bags to and from nearby planes.

A field representative for the airline who was showing a reporter the long, circuitous route checked bags take put the suitcase on a belt where it was supposed to be. He said it likely fell off a belt or a baggage handler's vehicle. He didn't know how long it had been off its path.

The airlines have been imposing new fees, raising fares, reducing flights and, in some cases, cutting out free snacks in coach. But several big and small airlines alike have struggled relative to the industry in terms of baggage handling, on-time performance and other customer service metrics. An annual University of Michigan survey released in May found customers giving airlines the worst grades since 2001.

With the slow travel season now upon them, airlines face the dual challenges of increasing revenue to cover heavy fuel costs while also improving their product to give air travelers a return on their added investment.

"We realize that in order for us to regain that brand recognition and the customer loyalty that we used to own in the '80s and '90s, we ought to do something very dramatic and different," said Mark Mitchell, American's managing director of customer experience.

Delta Air Lines Inc.'s regional subsidiary Comair had the worst on-time performance in July among airlines surveyed by the Department of Transportation. From January through July, American Airlines' on-time arrival rate was the lowest among U.S. carriers, while UAL Corp.'s United Airlines' was second-lowest. Comair had the highest mishandled baggage rate in July, while the highest number of consumer complaints received by the DOT that month were about Delta. Comair's on-time performance from January through July ranked 17th out of 19 airlines, while Delta's ranked eighth.

The fourth-highest number of consumer complaints received by the DOT in July were about Tempe, Ariz.-based US Airways, which said in a Sept. 3 memo to employees that they would not be receiving a $50 bonus for the month because the airline's on-time performance did not place in the top three among the 10 largest U.S. carriers.

Executives blame weather, congestion in the Northeast and air traffic control issues for some of the problems, but they also acknowledge company specific problems. They say there have been improvements since the latest DOT figures were released.

American, a unit of Fort Worth-based AMR Corp., is keeping planes on the ground longer in some cities before turning them for their next flight so that if something goes wrong, there is extra time to board passengers and baggage. It plans to block a limited number of seats from being sold on flights in key markets this Thanksgiving to give it flexibility in re-accommodating customers on planes that would otherwise be full.

The carrier also is refurbishing the interiors of its Boeing 757s, upgrading business class seats on international flights, adding leather headrests to coach seats on MD-80s and testing Wi-Fi service on some aircraft.

And to make it easier and quicker to locate mishandled bags, American is equipping personnel with automated handheld bag tag scanners.

"There are huge costs when you have inconvenienced your customers," said Dan Garton, American's executive vice president of marketing.

Dorothy Boydston, a 48-year-old electrician from Hawaii, knows what Garton means.

On a recent trip from Santa Barbara, Calif., to Denver to see her daughter, Boydston had to spend a night at a Phoenix hotel at her own expense because she missed her US Airways connecting flight after, she said, an airline employee wrote the wrong gate number on her ticket. That came after she had to pay $15 to check a bag she tried to carry on the plane to Phoenix, when the airline told her there was no room in the overhead bins.

The next morning, she was still at Phoenix Sky Harbor International Airport, on standby for another flight to Denver.

"I could have rented a car for what it's costing me," she said.

Asked if passengers should get better customer service in light of the higher fares and fees they are paying compared to a year ago, Boydston said, "What customer service? There's no customer service anymore."

But Aaron Trompeter, 37, an English teacher who lives in Winchester, Va., said he still finds value in the price of an airline ticket these days, even if he has to deal with more hassles, pay to check bags and no longer gets free snacks on some flights.

"It's so much better than a stagecoach or a car," Trompeter said at Minneapolis-St. Paul International Airport after getting off a United flight from Washington. "So the lack of service, or the perceived lack of service, is still very much worth it."

Airline executives are unapologetic about the need to raise more revenue through fee and fare increases to cover their hefty fuel bills. They also say that certain offerings that were free to everyone before are still free for premium passengers like elite frequent-fliers and those people who travel in first class or business class.

"Food is the easiest one for me to defend," Garton said of American's decision to charge $3 for a cookie or a can of potato chips in coach. "When you open your minibar at the hotel tonight, it's not going to be free. When you go to the movie theater, the popcorn is going to cost you more than the ticket. Giving away food for free is an unusual thing the airlines started 70 years ago, but I would argue it was all first-class service 70 years ago."

Delta, the only one of the six legacy carriers not charging a fee for a first checked bag, is using technology and infrastructure upgrades to improve its baggage handling. It is about halfway through a $100 million capital project at its Atlanta hub that includes upgrading conveyor belts and sorting systems. It also has invested $10 million this year to roll out more wireless bag scanners so it can keep better track of where bags are in the transfer process.

Lee Macenczak, Delta's executive vice president of sales and marketing, said the airline holds itself to a high standard when it comes to speed and convenience.

"To the degree we don't deliver on that, it certainly does impact our brand," he said. "We are not satisfied where we are. We have a lot of work to do."

Stephen Gorman, Delta's executive vice president of operations, said weather issues can skew the on-time data. He said the carrier is working hard to improve what it can control.

"The foundation is on-time, clean, with bags, and friendly customer service," Gorman said. "Those are the fundamentals we know we have to do right."

Southwest Airlines Co., which has not faced the same threat from fuel prices as other carriers because of its aggressive fuel hedging program, boasts in recent TV commercials of still allowing all its passengers to check two bags for free. Its on-time arrival rate in July, third-highest among U.S. carriers, was nearly 20 percentage points above Comair's.

The Dallas-based airline led the industry in passenger satisfaction in the latest University of Michigan survey.'

"We've got to be in the business to make money, but not to sacrifice what our brand and our product offering is," said Daryl Krause, Southwest's senior vice president of customer services.

[Associated Press; By HARRY R. WEBER]

AP Business Writers Chris Kahn in Phoenix and Joshua Freed in Minneapolis contributed to this report.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.